Government throws cash at broadband problem

DTI will make £30m available for promoting affordable high-speed Internet in less-connected areas, but BT shareholders might not be so keen
Written by Graeme Wearden, Contributor

Faced with increasing concern over the disappointingly low number of broadband users in the UK, the government said on Tuesday that £30m would be made available to boost the take-up of high-speed Internet services.

The money is being targeted at those areas where it is most difficult for consumers to obtain broadband at on affordable price. Regional Development Authorities have been asked to come up with proposals that would increase broadband take-up in their area. The greatest chunk of the cash -- £4.4m -- will be available to Scotland, with the South West receiving £3.8m and the East £3.2m.

"Today's announcement marks the latest step as Government along with industry face the challenge of building a Broadband Britain," claimed e-commerce minister Douglas Alexander. The £30m was announced earlier this year, but this is the first time the government has said how it will be distributed.

Alexander hopes that local bodies will come up with pilot projects that would demonstrate the benefits of a high-speed Internet connection, ways of boosting information about broadband, and ideas for how schools can obtain cheaper broadband services.

In the short term, the initiative is unlikely to resolve one fundamental problem -- that homes in many parts of the country simply don't have access to affordable broadband.

BT claims that 13 million households are able to receive ADSL, now that it has made over 1,000 local exchanges ADSL-enabled. The cable companies, ntl and Telewest, both offer a broadband product to their customers. They believe that around 9 million households could connect to their services.

This still leaves large parts of the country, typically rural areas and the regions, with no realistic chance of being offered affordable broadband in the near future. However, the government is hoping that companies will extend broadband across Britain as more people sign up for it.

"We're aiming to encourage the take-up of broadband," a DTI spokesman told ZDNet News. "If companies see that their existing services are popular, they're more likely to roll out those services in more places".

Sir Peter Bonfield, chief executive of BT, may not share this confidence.

Delivering the 2001 Hinton lecture last week, he warned that some parts of the country are not financially viable for ADSL, as the population density is too low. "In these areas, the forecast demand is so low that we cannot justify the rate of return to our shareholders," he said. Bonfield predicted that it would take between three and four years before 25 percent of the UK's home Internet users were using broadband.

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